In this case the Court of Cassation held that an employer has the right, while organizing his business, to take restructuring measures as long as those measures do not breach employment contracts or compel employees to perform work which attracts a lower salary, compromises the employees' ethics or places the employee in a less prestigious position.

Claim

A labor action was filed by an Employee (the "Claimant") against a local company (the "Defendant"). The Claimant requested the court to order the Defendant to pay him compensation in the amount of AED 475,463.35 plus interest.

The Claimant's case was that she had joined the Defendant Company on 23 June 2004 after signing an unlimited term contract with a basic salary amounting to AED 52,479. The Claimant submitted that she had remained employed until 3 August 2008 when the Defendant forced her to submit her resignation after insulting and humiliating her by removing her from her office and re-locating her to a secretary station. The Claimant also submitted that the Defendant had failed to pay her the following amounts:

  • AED 3498.6 in arrears salary for 2 days in August 2008;
  • AED 2479 notice;
  • AED 57,437 compensation for arbitrary termination from work;
  • AED 104,958 compensation for untaken annual leave days for two consecutive years;
  • AED 157,437 compensation for end of service indemnities;
  • AED 7,000 return air ticket.

Court of First Instance

The Court of First Instance ruled against the Defendant and requested it to pay the Claimant the amount of AED 119,944 plus 9% legal interest from the filing date of claim (14 September 2008) until full payment. Unless the Claimant had taken up other employment, the Defendant was also ordered to supply the Claimant with a return ticket to her home country or cash equivalent in AED. The Court of First Instance dismissed the Claimant's other claims. Consequently, both parties appealed the decision

Court of Appeal
The Court of Appeal ruled as follows:

  • To reverse the Court of First Instance's decision that dismissed the Claimant's claim for arbitrary termination;
  • To amend the amount awarded by the Court of First Instance to AED 329,860;
  • To uphold it otherwise.

The Defendant appealed to the Court of Cassation.

Court of Cassation
The Defendant argued before the Court of Cassation that the Court of Appeal had erred in its decision to amend the compensation amount for the Claimant. The grounds for the Defendant's decision were as follows:

  • That the Claimant's termination was not arbitrary as she had voluntarily submitted her resignation;
  • That moving her office to the secretary stations was a matter of internal restructuring which did not involve any breach of her employment contract or change of her title;
  • That the freezing/curtailing of her financial authorities and the suspension of her email account was a normal procedure not amounting to harassment;
  • That the intimidated letters purportedly received by the Claimant by the Defendant had been fabricated by her;
  • That the Defendant did not prevent the Claimant from entering the premises within the notice period;
  • That the cancellation of her access card was a precautionary measure that the company would normally take it situations of voluntary resignation which did not, in any event, prevent her from entering the premises during normal business hours from the reception;
  • That the Claimant was not entitled for compensation for accrued annual leave as she had already exhausted her leave entitlements.

In relation to the first six points of the Defendant's appeal, the Court of Cassation held as follows:

  • An employer has the right to restructure his company but on condition that this restructuring measures do not breach unlimited term employment contracts or compel employees to perform work which attracts a lower salary, compromises the employees' ethics or places the employee in a less prestigious position.
  • The interpretation of Article 122 (a) of the labor law means that it fell within the full discretion of the Court to decide whether the acts of employers, which allegedly cause voluntary resignations, constitute arbitrary termination. If an act is so classified, the employee will be entitled to claim compensation for arbitrary termination and notice period and air flight ticket.
  • Employees who sign an unlimited term contract are not entitled for compensation in relation to the termination of the contract and the notice period unless arbitrary termination is proven.

The Court of Cassation upheld the decision of the Court of Appeal. The Court noted that the Claimant had been the head of legal department, a position which required her respectful treatment by her employer. The Defendant had not denied that it had removed the Claimant from her office and relocated her to the secretary stations, putting her under the supervision of one of the secretaries in the process. The Court also found that the office relocation, in combination with the Defendant's curtailing of the Claimant's financial authorities and suspension of her email account constituted a breach of her employment contract.

The Court determined that this breach had led to the Claimant's resignation. The Court of Cassation agreed with the Court of Appeal's conclusion that the Defendant's acts constituted arbitrary termination. The Court concluded that the Claimant was entitled to compensation in accordance with Article 123 of the Labour Law. The Court further held that the Claimant had 9 days annual leave owing to her, for which the Defendant was ordered to pay compensation.

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